Thai loan shark victims to get relief

[Admin]

Thai loan shark victims to get relief 
Bangkok Post: 20 Nov 2009
Loan shark victims get relief
Govt launches scheme for cheap refinancing

The government yesterday kicked off a scheme to free the poor from the clutches of loan sharks.

Prime Minister Abhisit Vejjajiva said illegal money-lending posed an obstacle to the government's plan to bolster the economy and build a strong nation.

"As many as 1 million people are trapped in debts, especially debts obtained from outside the system.

"Even those who are financially healthy would find it hard to meet those interest requirements," he told a seminar attended by public sector executives.

His office was flooded with complaints about loan sharks.

"Illegal money lending is not just a personal or a family problem," he said.

"It is also related to national security, law and order, law enforcement, underground influence, violence and crime."

Previous attempts to tackle loan sharking fell flat because they were not comprehensive.

Under the government's scheme, the Finance Ministry would provide soft loans, and other agencies such as the Interior and Justice ministries, the Royal Thai Police and the Anti-Money Laundering Office would be asked to support the scheme.

"Underground lending is closely related to dark influence. These agencies will help transfer debts so the scheme can proceed," he said.

Under the scheme, about 1 million households would be offered soft loans with a limit of 200,000 baht each to pay off loan sharks.

Six government banks would join the scheme and offer an annual interest rate of 12% in the first three years.

The Government Savings Bank, however, would offer a special rate of 0.75% per month, or 9% per year, for the duration of the loan scheme.

The interest rate on the soft loans is low compared to that charged by loan sharks, at about 20-40% a month.

Finance Minister Korn Chatikavanij said participating debtors would receive training in career development and book-keeping to ensure they could pay off loans and avoid a new debt trap.

Justice Minister Pirapan Salirathavibhaga insisted the scheme would not put debtors in danger.

"It is about asking the [unlicensed] creditors who are breaking the law to lower the interest rate to the maximum default rate at 15% per year," he said.

A centre would be set up to receive information about illegal lending. It would work with the Interior and Finance ministries.

He threatened legal action against the lenders who intimidated or forced their clients to pay debts.

"It is also a criminal offence to deduct interest from the loan in advance. That is extortion," Mr Pirapan said.

The Department of Special Investigation and Amlo would examine illegal lenders' assets and have them seized.

The minister also called for revision of the law governing the interest rate charged by credit card operators, claiming it was unfair. He said credit card operators charged interest and fees in excess of 15%.

"There is a misunderstanding that the credit card business is a business of commercial banks and uses a special law," the minister said.

"I have talked to Mr Korn about pushing for an amendment of the credit card business law to ensure it's fair."

Interior Minister Chavarat Charnvirakul said cooperation from local leaders was needed to negotiate with creditors and enable refinancing.

"We will send officials to talk creditors into joining the scheme. If they do not join, that's fine, because we have other measures to help," he said.


Writer: Wichit Chantanusornsiri and King-oua Laohong

www.bangkokpost.com/news/local/27734/loan-shark-victims-get-relief

[Prakhonchai Nick]

20-40% A Month!!

Wow! I'm mising out.

Better put my rates up a bit!